What is being ‘algorithm-driven’?
Can you imagine a scenario in which your company’s most complicated processes are executed cleanly, efficiently, and with high levels of automation? Where problems are anticipated well ahead of time, even with complex rules or conditions? Where waste is reduced to a minimum, or even completely eliminated?
When data flows data through a business, so too do the insights and added value that data brings. By allowing information to flow vertically through all areas of the business, each department can learn from one another’s processes to refine their own. This pipeline can be yielded to your advantage to provide a high-value method of increasing overall business performance (and low-risk if you already have the infrastructure in place) in the form a business algorithm.
Why use algorithms?
Algorithms are usually an after thought for companies with thoroughly tested and well-established processes for the collecting, processing and storing of data. However, automation does not attempt to replace all of your existing business processes in one go, but rather focus on those that are the most crucial, or by stripping away wasteful aspects to make your business more streamlined. By employing techniques like prescriptive analytics we can:
- Use historical and current data to build a data model, assign basic rules, and predict an outcome.
- Make a decision, specifying the actions necessary and understanding the key predictors of each outcome.
- Measure the outcomes to determine what to do next.
This process of refining a model with data and experience is one of the core tenets of becoming an algorithm-driven business. Build an algorithm that can: minimise risk when making decisions; identify fraud and anomalous transactions, reallocate internal resources more effectively, diagnose problems ahead of time; or increase communication within your business.
What’s more, your algorithm becomes a living, breathing entity that belongs to you. You can continue to nurture it or trade it away when you are ready.